There are thousands of buildings and skyscrapers in Hong Kong that are either used for residential or commercial purposes. Each building is operated by a corporate company that ensures the facility is kept updated and manages the admin side of the building.
The building corporation management is liable for several duties regarding the building, mainly the common areas. In fact, they are responsible for almost anything that goes wrong in the common area or the external structure.
Their liability can be tested when things go extremely wrong, resulting in lawsuits, property damage, financial loss, or even building reputation loss. To avoid these risks, building owners can purchase owner corporation liability insurance.
What is Owner Corporation Liability Insurance?
Owner corporation liability insurance, also known as building owner’s corporation third-party liability insurance, is one of the four mandatory third-party insurance in Hong Kong. The insurance provides legal and financial protection for the incorporated building owners against building ownership risks.
These risks can range from third-party accidents, negligence lawsuits to unforeseen property damage. Having the insurance can save the incorporated owners millions. The insurance will reimburse legal defence, compensation and settlement costs related to the covered risks.
However, what are the possible risks that are covered by owner corporation liability insurance?
What Does Owner Corporation Liability Insurance Cover?
Third-party Liability
There are hundreds to thousands of people that come in and out of buildings. Each one goes to either their home, office or shop. Even though everyone may be going to a different location, they all have to, at some point, enter and exit through the common areas.
Buildings have at least one or more common areas with a high chance of public liability risks. Public common spaces include stairwells, lobby, lifts, parking area and entrance walkways.
In these areas, the building activity or space may injure the public or be the cause of property damage. Third-party injuries or property damage can lead to lawsuits against the building owner corporation.
The corporation is responsible for providing compensation or settlement regarding third-party claims. Owner corporation liability insurance has a third-party insurance cover that will protect the building owner corporation from lawsuits that result from third-party injuries or property damage. The insurance makes sure the affected party is compensated correctly.
Management Liability
The building management corporation is liable for many factors and performs countless duties to benefit the building and the public. Due to a large number of expectations, a building corporation’s management may be accused of fraudulent or negligent activities.
If the public, landlords or the local administration do not believe the management is doing their duty, they will take legal action against the building owner corporation. The lawsuits could be due to maintenance issues, breach of contract, building fund embezzlement, lack of safety or any negligence that can harm a party.
Owner corporation liability insurance will protect the management’s liability. The insurance will assist the owner corporation in defending themselves and reimburse the compensation costs related to the claim. The insurance is a must for management liability as these lawsuits could arise at any point.
Property Damage
Maintaining a building is hard work and consists of various factors that must be checked daily, weekly or monthly. There is always a risk of something going wrong and causing property damage to the building.
These property damage causes can include leaking roofs, fires, burst plumbing, flooding, electrical issues or even sudden weather damage. These issues can result in costly property damage and a group of unhappy people. The building corporation is liable for quickly repairing and replacing damaged property before it affects more people and leads to lawsuits.
Fortunately, owner corporation liability insurance will cover costs related to property damage. The insurance will reimburse repair or replacement costs to help the incorporated corporation avoid substantial financial losses. However, the insurance will not cover property damage due to wear and tear over time.
Crime
No matter how safe a country is, there is some sort of crime. Most buildings store expensive goods that can be robbed by criminals. Any building can be a victim of crime, from break-ins/ theft to vandalism.
The crime could be due to a lack of security or just accidental negligence. Criminals can rob expensive electronics, cash and more, depending on the type of building. Crime can also include vandalism of the interior or exterior of the building, such as graffiti or structural damage.
Owner corporation liability insurance will cover crime that occurs in the common area of the building. The insurance will cover the repair and replacement costs of the affected area. The factor of this insurance can help a building corporation from significant losses and unpredictable crime situations.
Benefits of Owner Corporation Liability Insurance
Any corporation that owns and manages various buildings needs owner corporation liability insurance to cover its risks. The insurance brings multiple benefits to building corporations. Benefits help them focus on their duties and provide the best-serviced building to the public.
The main benefit is the financial cover when issues do occur. The insurance will cover the financial loss related to the lawsuit, accident or damage. Additionally, Hong Kong laws require the insurance to have a minimum third-party cover of HKD 10 million for each claim.
Insurance also gives corporations peace of mind when they know insurance will cover sudden claims. The safety net enables the business to focus on developing Hong Kong buildings rather than overstressing uncertain risks.
Owner corporation liability insurance is mandatory for the right reasons, to protect the management, landlords, tenants and workers when issues occur.
To Learn More about owner corporate liability insurance and get the best coverage for your liability in Hong Kong and Asia, contact Red Asia Insurance.
